GlobalFoundries gets $300m US grant for silicon photonics AI chips

The $300 million award from the US Commerce Department targets a technology that moves data at the speed of light, bypassing copper bottlenecks that constrain today's AI systems.

The US Department of Commerce will award GlobalFoundries Inc. $300 million to accelerate research and development of silicon photonics technology, the optical interconnect method that transmits data using light rather than electrical signals, the company said Wednesday. GlobalFoundries shares surged more than 16% in pre-market trading on the news.

"Silicon photonics is essential to AI infrastructure. For a decade, the industry talked about the shift from copper to optical as something that was coming — today it is here," said Tim Breen, chief executive officer of GlobalFoundries. The company has spent more than a decade building the technology and manufacturing base to lead this transition, he said.

The funding from the CHIPS Research and Development Office will support development of next-generation optical materials, wafer technologies and advanced packaging, including 3D hybrid bonding, that enable near-packaged optics (NPO) and co-packaged optics (CPO). GlobalFoundries is targeting data transfer speeds of 400 gigabits per second with up to five times greater energy efficiency than current-generation implementations, building on its recently introduced SCALE platform (Silicon Photonics Co-Packaged Advanced Light Engine).

The award is part of the Trump administration's effort to direct CHIPS Act research funding toward critical semiconductor technologies as Washington seeks to strengthen its position against China in advanced chip manufacturing. Much of the supply chain for silicon photonics and advanced optical packaging is currently concentrated outside the US, with major manufacturers including Taiwan Semiconductor Manufacturing Co. and Israel's Tower Semiconductor.

Why Silicon Photonics Matters Now

Traditional copper interconnects are hitting physical limits as AI workloads scale, creating a bottleneck in data movement between processors. Silicon photonics replaces electrical signaling with photons, enabling higher bandwidth, greater interconnect density and lower power consumption — critical as AI data centers consume ever more electricity. The technology addresses what Nvidia Corp. founder Jensen Huang called "the new industrial revolution" in supply chains, with the company endorsing GlobalFoundries' investment as essential to scaling US manufacturing.

The research will leverage GlobalFoundries' existing facilities in Malta, New York, and Burlington, Vermont, providing a US-based path to high-volume silicon photonics manufacturing. In a separate agreement, the Commerce Department will receive equity in GlobalFoundries representing approximately 1% ownership, allowing the American public to share in the company's growth.

Industry Backing and Competitive Landscape

The announcement drew endorsements from across the AI ecosystem. AMD Chief Technology Officer Mark Papermaster said silicon photonics and advanced packaging "will be key to delivering the bandwidth, energy efficiency, and system-level connectivity required for the next generation of AI cluster infrastructure." Nvidia's Huang called silicon photonics "essential to that future," while Microsoft's Rani Borkar said the technology is "an important enabling technology" for next-generation AI infrastructure.

Broadcom, Cisco, Marvell and Meta also voiced support, reflecting broad industry consensus that optical interconnects are the path forward as AI compute clusters scale to tens of thousands of chips. The technology transition threatens incumbents in traditional copper-based interconnect solutions while creating opportunities for companies with silicon photonics manufacturing capability.

GlobalFoundries competes with TSMC and Samsung Foundry in the semiconductor manufacturing market, but its focus on specialty technologies including silicon photonics differentiates it from the leading-edge logic race. The $300 million grant strengthens its position in a niche that is rapidly becoming central to AI infrastructure. GlobalFoundries trades at a discount to TSMC on forward earnings, reflecting its smaller scale and lack of leading-edge process nodes, but the silicon photonics bet could open a new revenue stream as AI data center demand accelerates.

This article is for informational purposes only and does not constitute investment advice.